This paper focuses on the issue of risk in the R&D and innovation processes. It examines the degree of risk suggested by the four main streams of the literature. While risk has not been a major focus of the empirical literature, the results suggest that the vast majority of inventions are worth relatively little, while a small proportion are extremely valuable. The second part of the paper argues that the net present value rule may not be appropriate in the presence of high risk, and the R&D decision may require an optimal stopping rule, which gives very different results. Adopting an optimal stopping rule in the face of a normal distribution of annual gross returns, the lifetime distribution of returns are similar to those observed in the real world. In addition, it is possible to use the results to replicate the observed behaviour of patent renewals.

Most popular related searches

Related articles

Mother Nature is an unreliable farming partner. Sometimes the weather helps, but too often it also hurts us. And there’s been a lot of hurt lately. Hurricanes have flooded east Texas. They have destroyed about half of the remaining citrus crop, flooded pasture and blown away much of the sugarcane in Florida. They have leveled pecan trees and pine trees in southern Georgia. Meanwhile, wildfires have burned tens of thousands of acres and destroyed timber resources in Montana, Oregon and Washington.
When...

In the last year wholesale power prices swung by around 45%, which is twice as volatile as the previous five years.
Those who fixed their electric bill for the next three years at the height of this market could end up paying thousands of pounds more than others, who may have pursued a more calculated and less risky approach.
Fixed vs. Flex
It`s often thought that fixed rate contracts are less risky than flexible contracts, which is a fallacy. Fixed rates do provide budget certainty, but the odds are 1:365...

This report presents the key findings of a joint analysis of EU-OSHA’s second European Survey of Enterprises on New and Emerging Risks (ESENER-2), Eurostat’s Labour Force Survey (LFS) 2013 ad hoc module on accidents at work and other work-related health problems, and Eurofound’s 6th European Working Conditions Survey (EWCS).
The aim was to have a comprehensive overview of the state of OSH in Europe by bringing together, on the one hand, the perspectives of establishments on risk management and...

The water safety plan (WSP) approach is being widely adopted as a systematic approach to improving the safety of drinking water. However, to date, the approach has not been widely used for improving the safety of drinking water in those settings where people have to collect water away from their home. Most rural areas in South Africa still consume unsafe water despite WSP implementation and improved water sources provided by municipalities. This study used hazard analysis critical control point to assess drinking...

To achieve advanced watershed ecological management, policy-makers have struggled to predict ecological impacts for a long time. As a process of ecosystem analysis, ecological risk assessment (ERA) has been widely adopted to analyse the possibility of adverse ecological effects. ERA has developed from considering only a few indicators in an area to multiple sources and receptors in large-scope regions. However, the transfer of risk in large-scope regions caused by internal interaction has not been deeply analysed,...

Customer comments

No comments were found for The measurement and management of risk in R&D and innovation. Be the first to comment!

Add your comment

Great! comment successfully added!

Contact

Your message:

Your email

Your first name

Your last name

I would like to receive periodic email updates and special offers from select suppliers.